Lasseter Corporation has provided its contribution format income statement for August. The company produces and sells a single product.

Sales (3,800 units) $ 95,000
Variable expenses 38,000
Contribution margin 57,000
Fixed expenses 43,600
Net operating income $ 13,400
If the company sells 3,900 units, its total contribution margin should be closest to:

a. $13,753
b. $57,000
c. $58,500
d. $59,500

The correct answer is C.

Explanation:

Giving the following information:

Sales (3,800 units) $ 95,000

Variable expenses 38,000

First, we need to calculate the unitary selling price and unitary variable cost.

Selling price= 95,000/3,800= $25

Unitary variable cost= 38,000/3,800= $10

Now, we can calculate the total contribution margin for 3,900 units:

Sales= 25*3,900= 97,500

Variable cost= 10*3,900= (39,000)

Contribution margin= 58,500

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answer///supply is elastic, and demand is inelastic;